In First Use of Section 311 Against a Non-Bank Financial Institution, Treasury Acts to Protect the U.S. Financial System from Foreign Exchange Houses Tied to Global Narcotics and Money Laundering Networks and Hizballah

WASHINGTON  The U.S. Department of the Treasury today named two Lebanese exchange houses, Kassem Rmeiti & Co. For Exchange (Rmeiti Exchange) and Halawi Exchange Co. (Halawi Exchange), as foreign financial institutions of primary money laundering concern under Section 311 of the USA PATRIOT Act (Section 311)  the first time the Department has used Section 311 against a non-bank financial institution. Todays action reflects the Treasury Departments continuing commitment to target illicit financial networks that launder millions of dollars in funds for narcotics traffickers and that, in the process, provide substantial financial benefits to the terrorist organization Hizballah. This action will protect the U.S. financial system from these activities and expose entities supporting the network of designated drug kingpin Ayman Joumaa.

Following Treasurys action against the Lebanese Canadian Bank, the Joumaa narcotics network turned to Rmeiti Exchange and Halawi Exchange to handle its money laundering needs, said Under Secretary for Terrorism and Financial Intelligence David S. Cohen. As our actions against the Lebanese Canadian Bank, Joumaa and the two exchange houses today make clear, the Treasury Department, working with our partners across the Federal government, will aggressively expose and disrupt sophisticated multi-national money laundering organizations that handle drug proceeds for criminal enterprises including the terrorist group Hizballah.

The Treasury Departments 311 action against Lebanese Canadian Bank in February 2011, as well as designations in January 2011 of Ayman Joumaa and two exchange houses, Hassan Ayash Exchange and Ellissa Exchange, exposed the Joumaa networks money laundering scheme and forced these financial institutions out of the U.S. and international financial systems.

Rmeiti Exchange and Halawi Exchange subsequently picked up the networks money laundering work, including the trade-based money laundering schemes involving used car dealerships in the United States and consumer goods from Asia. Rmeiti Exchange and Halawi Exchange used their foreign money transmitter businesses to process millions of dollars on behalf of narcotics traffickers and money launderers, and attempted to obfuscate the source of illicit funds by comingling or splitting transactions across a variety of businesses, financial institutions, and continents, including in the United States.

In conjunction with todays findings that Rmeiti Exchange and Halawi Exchange are foreign financial institutions of primary money laundering concerns, Treasurys Financial Crimes Enforcement Network (FinCEN) also issued an order, effective immediately and with a 120-day duration, that requires U.S. financial institutions to report information on any new or attempted transactions by Rmeiti Exchange and Halawi Exchange. Treasury also today issued a notice of proposed rulemaking that, if adopted as a final rule, would continue the reporting requirement imposed by the order and prohibit any U.S. financial institution from opening or maintaining a correspondent or payable-through account that is used to process a transaction that involves Rmeiti Exchange and Halawi Exchange, effectively cutting off these exchanges from the U.S. financial system.

The Treasury Department will continue to work with the Lebanese Central Bank and other relevant Lebanese authorities to address concerns highlighted by todays action.

These actions would not have been possible without considerable support from the Drug Enforcement Administration, Customs and Border Protection, the Federal Bureau of Investigation, and the New Jersey State Police.

Kassem Rmeiti and Co. For Exchange

Rmeiti Exchange, its ownership, management, and associates facilitate extensive transactions for money launderers and drug traffickers. Between 2008 and March 2011, Rmeiti Exchange and its owner provided at least $25 million in payments to U.S.-based car dealers and exporters associated with the Joumaa narcotics and money laundering network. Some of these car dealers and exporters have been named in a civil money laundering and forfeiture action against the Lebanese Canadian Bank, drug kingpins Ayman Joumaa and Ali Mohamed Kharroubi, and Elissa Exchange and Hassan Ayash Exchange, brought by the U.S. Attorneys Office for the Southern District of New York.

Rmeiti Exchange and its management have also conducted financial activities for other money laundering and drug trafficking organizations operating in both Europe and Africa. Between March 2011 and October 2012, Rmeiti Exchange facilitated the movement of at least $1.7 million for Beninoise and Lebanese money launderers and drug traffickers. This included Rmeiti Exchange and Kassem Rmeiti taking on large cash deposits, collecting bulk cash currency, issuing cashiers checks, and facilitating cross-border wire transfers on behalf of known and suspected money launderers, drug traffickers, and Hizballah affiliates.

As of December 2011, we believe that Hizballah had replaced U.S.-designated Elissa Exchange owner Ali Kharroubi with Haitham Rmeiti  the manager/owner of STE Rmeiti  as a key facilitator for wiring money and transferring Hizballah funds. Rmeiti Exchange, through its owner, Kassem Rmeiti, owns STE Rmeiti. Treasury believes that this activity demonstrates Hizballahs efforts to adapt after U.S. Government disruptive actions, and illustrates the need for continued action against its financial facilitators.

Halawi Exchange Co. (Halawi Exchange)

Halawi Exchange represents a substantial threat to the U.S. and international financial systems, given its extensive illicit financial activity on behalf of a variety of international narcotics trafficking and money laundering networks. Halawi Exchange often employs deceptive practices to disguise this illicit financial activity to mislead U.S. and international banking institutions.

Halawi Exchange facilitates transactions for a network of individuals and companies which launder money through the purchase and sale of used cars in the United States for export to West Africa. In support of this network, management, ownership, and key employees of Halawi Exchange coordinate transactions  processed within and outside of Halawi Exchange  on behalf of Benin-based money launderers and their associates. For example, in early 2012, Halawi Exchange, including its management, ownership, and key employees were involved in arranging multiple wire transfers totaling over $4 million on behalf of one such money laundering network. As of mid-2012, central figures in this scheme planned to move $224 million worth of vehicle shipping contracts through this same network via a Halawi-owned Benin-based car lot, which receives vehicle shipments from the United States.

As of late 2012, Benin-based money launderers continued to use Halawi Exchange to wire transfer money to U.S. car suppliers in support of their money laundering operations. The proceeds of car sales were hand-transported in the form of bulk cash U.S. dollars from Cotonou, Benin to Beirut, Lebanon via air travel and deposited directly into one of the Halawi Exchange offices, which allowed bulk cash deposits to be made without requiring documentation of where the money originated. Halawi Exchange, through its network of established international exchange houses, initiated wire transfers from its bank accounts to the United States without using the Lebanese banking system in order to avoid scrutiny associated with Treasurys designations of Hassan Ayash Exchange, Elissa Exchange, and its Lebanese Canadian Bank Section 311 Action. Money was then wire transferred via Halawis banking relationships indirectly to the United States through countries that included China, Singapore, and the UAE, which were perceived to receive less scrutiny by the U.S. Government.

Additionally, Halawi Exchange is known to have laundered profits from drug trafficking and cocaine-related money laundering networks for a leading Hizballah official and narcotics trafficker. Halawi Exchange has also been routinely used by other Hizballah associates as a means to transfer illicit funds.

To view a Fact Sheet on Section 311 of the USA PATRIOT Act, visit this link​​.

To view a chart related to this action, visit this link​

To view the complete Findings against Kassem Rmeiti & Co For Exchange and Halawi Exchange Co., visit this link

To view the Notice of Proposed Rulemakings, visit this link

To view the Orders imposing Section 311 Special Measure One, visit this link

Treasury Targets Major Money Laundering Network Linked to Drug Trafficker Ayman Joumaa and a Key Hizballah Supporter in South America

6/27/2012

WASHINGTON  The U.S. Department of the Treasury today designated four individuals and three entities involved in laundering the proceeds of narcotics trafficking for drug kingpin Ayman Joumaa. Treasury also designated a Colombia-based individual under its terrorism authority, Executive Order (E.O.) 13224, for directing Hizballahs fundraising activities in the Americas. This individual was previously designated under the Foreign Narcotics Kingpin Designation Act (Kingpin Act) for his role in narcotics-related money laundering. Todays designations further expose Ayman Joumaas network as a major narcotics and money laundering enterprise that has reach throughout the Americas and the Middle East with links to Hizballah. As with the February 2011 action against Lebanese Canadian Bank, these actions again highlight Hizballahs links to major South American narcotics money laundering organizations.

The Joumaa network is a sophisticated multi-national money laundering ring, which launders the proceeds of drug trafficking for the benefit of criminals and the terrorist group Hizballah, said Under Secretary for Terrorism and Financial Intelligence David S. Cohen. We and our partners will continue to aggressively map, expose and disable this network, as we are doing with todays sanctions.

Abbas Hussein Harb and Ibrahim Chibli

Abbas Hussein Harb and Ibrahim Chibli are being designated today pursuant to the Kingpin Act for collaboration with designated drug kingpin Ayman Joumaa in the movement of millions of dollars of narcotics-related proceeds. Harbs Colombia- and Venezuela-based organization launders money for the Joumaa network through the Lebanese financial sector. Chibli used his position as the manager of the Abbassieh branch of Fenicia Bank in Lebanon to facilitate the movement of money for Joumaa and Harb. For example, in 2010, Joumaa moved over a million dollars into an account owned by Harb and managed by Chibli. Harb is a dual citizen of Venezuela and Lebanon, and Chibli is a Lebanese national.

Ali Mohamad Saleh

Ali Mohamad Saleh, a Lebanese Colombian national, is also being designated today pursuant to E.O. 13224 as a Specially Designated Global Terrorist for acting for or on behalf of and providing financial, material, or technological support to Hizballah. Saleh is a key Hizballah facilitator who has directed and coordinated Hizballah activity in Colombia. He is a former Hizballah fighter with knowledge of Hizballah operations plans due to his contact with Hizballah authorities in Lebanon. As of July 2010, Saleh was a contact of Hizballahs Foreign Relations Department and has maintained communication with suspected Hizballah operatives in Venezuela, Germany, Lebanon, and Saudi Arabia. Saleh was the acting leader of a Hizballah support cell in Maicao, Colombia that raised funds for transfer to Hizballah. In this role, Saleh solicited donations for Hizballah from business owners and residents. Saleh coordinated the transfer of checks and U.S. dollars by courier from Maicao via Venezuela to Hizballah in Lebanon. He was previously designated under the Kingpin Act on December 29, 2011, for his role as a Maicao based money launderer for the Cheaitelly/El Khansa criminal organization, which is linked to the Joumaa network. Saleh is the brother of Joumaa-network associate Kassem Mohamad Saleh, who was also named today under the Kingpin Act for his role in supporting Abbas Hussein Harb.

Additional Kingpin Designations

Ali Houssein Harb (Abbas Hussein Harbs brother) and Kassem Mohamad Saleh (Ali Mohamad Salehs brother) were also designated under the Kingpin Act today for their links to the Joumaa network. Ali Houssein Harb and Kassem Mohamad Saleh are dual citizens of Lebanon and Venezuela. The three companies targeted as part of todays action under the Kingpin Act for being owned or controlled by Abbas Houssein Harb and/or Kassem Mohamad Saleh are: Importadora Silvania and Bodega Michigan, both based in Colombia, and Importadora Silvania, C.A., based in Venezuela.

BACKGROUND:

Ayman Joumaa was designated pursuant to the Kingpin Act in January 2011 for his role as a high-level money launderer and drug trafficker operating in the Americas, Middle East, Europe, and Africa. Joumaa and his organization laundered proceeds from their illicit activities  as much as $200 million per month  through various channels, including bulk cash smuggling operations and Lebanese exchange houses. Since Treasurys designation, he was subsequently indicted in November 2011 by a federal grand jury in the Eastern District of Virginia for being the leader of an international drug trafficking and money laundering network that coordinated multi-ton shipments of cocaine from Colombia to the Los Zetas Mexican drug cartel destined for the United States and for laundering hundreds of millions of dollars in these drug proceeds back to the Colombian suppliers.

Todays actions, which prohibit U.S. persons from conducting financial or commercial transactions with the designated individuals and entities and freeze any assets they may have under U.S. jurisdiction, were taken in close coordination with the Drug Enforcement Administration. The DEA investigation of Ayman Joumaa that helped lead to todays Treasury actions is critical to protecting the U.S. financial system from illicit activity and is another tool used to disrupt and dismantle these drug and money laundering networks, said DEA Financial Operations Chief John Arvanitis. These sanctions will go a long way toward ensuring that the entire Joumaa network is brought to justice.

This action is part of the Treasury Departments ongoing efforts pursuant to the Kingpin Act to target the financial networks of significant foreign narcotics traffickers and their organizations worldwide. The Treasury Department has designated more than 1,100 individuals and entities linked to drug kingpins since June 2000. Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

Todays action also highlights the Treasury Departments ongoing efforts to target terrorists and those providing support to terrorists or to acts of terrorism, isolating them from the U.S. financial and commercial systems. Hizballah was listed as a Specially Designated Terrorist on the annex to E.O. 12947 of January 23, 1995. The U.S. Department of State designated Hizballah as a Foreign Terrorist Organization in 1997. Additionally, on October 31, 2001, Hizballah was designated by the State Department as a Specially Designated Global Terrorist pursuant to E.O. 13224.

Its hard to uphold a reputation as a devoutly religious terrorist group if you make millions selling cocaine. Just ask Hezbollah.

Last month, the US government filed suit against a number of American and Lebanese businesses that allegedly helped bankroll the Lebanese terrorist group. The civil indictment in Manhattan blew the lid off a vast criminal network that included money-laundering, cocaine deals and more  including 30 US car dealerships that helped the group launder cash.

As one investigator quipped, Hezbollah is the Gambinos on steroids.

The indictment charges Hezbollah kingpin Ayman Joumaa with smuggling more than 100 tons of Colombian cocaine with the Mexican Zetas drug cartel, yielding hundreds of millions of dollars for the terror group. Indeed, the feds show that Hezbollah relies on a carefully constructed system of criminal enterprises from America to Africa to the Middle East.

Since its 1982 birth, Hezbollah has worked hard to portray itself as a resistance organization, fighting against the alleged injustices of Israel, the United States and others, earning it wide respect across the Middle East.

But today the groups operatives  at home and abroad  are thugs who profit from drugs, fraud and more. This contradiction could help erode support among Hezbollahs pious Shiite followers.

In fact, the US government has for years warned of the growing Hezbollah drug and crime operations in the lawless Tri-Border Area of Argentina, Paraguay and Brazil.

...

Lebanons Shiites are increasingly asking themselves: Are Hezbollahs leaders fighting for justice, or just proceeds from crime?

Drug Enforcement Administration agents have raided an Oklahoma car dealership that the government suspects may be one of about 30 such businesses in the U.S. involved in funding the terrorist group Hezbollah.

DEA agents say the car lot of Ace Auto Leasing in Tulsa is part of a huge network that is selling cars and drugs — and then using the money to support terrorism against the U.S., myfoxphoenix.com reports.

During Friday’s raid, agents could be seen carryout out filing cabinets and other items. They also questioned employees and took inventory.

“They’re making big time money and it’s going right into weapons acquisition, terrorist training, recruiting, corruption. Things needed to carry out terrorist attacks across the world,” said Rusty Payne of the DEA. “Some of that money is flowing back to the United States, back to these used car companies, to purchase more used cars to ship them to West Africa to sell those at a profit and then mix those used car proceeds in with the drug dollars.”

SNIPPET: “Among other things, I have reason to believe Ayman Joumaa is a ego-surfer, searching the Internet on a regular basis, looking for information about himself, including information found on this site. So with that in mind: Hey Junior, how’s it hangin’?”

SNIPPET: “”Hizballah is operating like a major drug cartel, and we’re going to actively investigate them as such with all our law enforcement partners acting as one team,” Drug Enforcement Administration Special Operations Special Agent Derek Maltz told reporters Tuesday. “This is another of many clear links between global drug trafficking and terrorism. Drugs and terrorism coexist across the globe in a marriage of mutual convenience. As state-sponsored terrorism has declined, these dangerous organizations have looked far and wide for resources and revenue to recruit, to corrupt, to train, and to strengthen their regime.”

Hizballah increasingly has turned to criminal enterprises for money because Iran cannot provide the same financial support it used to, said David Cohen, Treasury’s Under Secretary for Terrorism and Financial Intelligence. The money funds global terror operations, he said, referring to a suspected Hizballah bombing of Israeli tourists in Bulgaria last summer, and its ongoing support for Syrian dictator Bashar al-Assad’s crumbling regime.

Hizballah “has long sought access to the international financial system in order to move its terrorist funds and to launder the profits from its involvement in illegal activity,” Cohen said. “Make no mistake, [Hizballah] is both a full-fledged terrorist organization, lavishly funded over the years by Iran, and an enterprise that increasingly turns to crime to finance itself as the economic pressure on Iran mounts and Iran’s financial situation becomes more tenuous.””

“Lebanese Canadian Bank to Pay $102 Million in Hizballah Laundering Case”

by Abha Shankar  Jun 27, 2013 at 6:56 pm

SNIPPET: “The Beirut-based Lebanese Canadian Bank (”LCB”) will pay $102 million as part of a settlement reached this week with federal prosecutors. The LCB was accused in a December 2011 complaint of funneling money to the Lebanese terrorist group Hizballah as part of a global money-laundering scheme.

The “settlement shows that banks laundering money for terrorists and narco-traffickers will face consequences for their actions, wherever they may be located. This type of money laundering network fuels the operations of both terrorists and drug traffickers, and will continue to use every resource at our disposal to sever the connection between terrorists, narco-traffickers, and those who fund their lethal agenda,” Manhattan U.S. Attorney Preet Bharara said in a Justice Department press release.

Lebanese financial institutions tied to Hizballah wired over $300 million from Lebanon into the United States to buy and ship used cars to West Africa as part of a money laundering scheme, the complaint alleged. Profits from the car sales and narcotics were then funneled back to Lebanon through money laundering channels controlled by Hizballah, including LCB and two Lebanese exchange houses  the Hassan Ayash Exchange Company and Ellissa Holding  as well as their subsidiaries and affiliates. The lawsuit sought $480 million in civil money laundering penalties from the Lebanese financial entities.

The Treasury Department identified LCB as a “primary money laundering concern” in February 2011 and prohibited American financial institutions from doing business with the bank. The bank allegedly laundered as much as $200 million per month in drug proceeds for a Hizballah-tied international drug ring led by Lebanese drug lord Ayman Joumaa. Joumaa was indicted in November 2011 on charges of transporting 100 tons of Columbian cocaine to the Los Zetas Mexican drug cartel.”

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